I am a longtime brand guy - mostly from the client side. I write mostly about smart or foolish things that brands do. I teach branding and social media at NYU and for ThirdWay Brand Trainers. Worked in marketing for Coca-Cola, Johnson & Johnson, DoubleClick and others ...

How Hybrid Publishers Innovate To Succeed

The publishing industry has been challenged by the online sales success of Amazon, the rise of eBooks, print-on-demand and most recently by self-publishing. Though the overall unit sales and book revenues for traditional publishing held up in 2012, pricing wars have accelerated. The 2013 holiday season, for example, saw bestsellers like John Grisham’s Sycamore Row discounted (in eBook form) all the way down to $3.29, as Porter Anderson notes in his story on eBook pricing.

I have written extensively on author and library reactions to this disruption, but the publishing industry itself is also morphing. A new class of hybrid publishers has emerged over the past two years to compete with both Big 5 publishers and successful self-publishers. These businesses combine traits of both traditional publishers and indie authors with a dash of Silicon Valley technology.

Though the models vary, three features distinguish some of the most successful hybrid publishers from traditional publishing and self-publishing.

#1 – No Big Advances –

While some hybrid publishers offer small advances (in the hundreds of dollars), they don’t pay advances in the manner of a Big 5 publisher. It allows these publishers to price their books more aggressively to gain market share without losing money. In return, authors earn higher royalties (though less than with self-publishing) which are paid monthly and are reportedly more transparent than standard big 5 publishing contracts.

On the flip side, most hybrid publishers don’t charge authors to publish. This gives them a marketable advantage against self-publishing or so-called ‘partner publishing’ where an author pays all of the upfront costs.

#2 – Few Salaries –

Many of these publishers operate with few salaried employees. At Booktrope, for example, a team – comprise of the author, editor, designer and marketing manager – forms to publish each new book. They’re all virtual employees, and none of them make a salary:

Everyone [the editor, designer, marketing manager and Booktrope itself] is paid via a percentage of profits. Nobody makes a dime unless the book sells. An author has a team of people who know what they’re doing but also has skin in the game.

- Katherine Sears, CMO Booktrope

Of course, nobody wants to get stuck with the revenue share of a dud, so at Booktrope the employees bid for the projects they want to work with. They also vote on which books will be accepted and their input as well as the input of a panel of beta readers helps inform the acquisition decision.

There are clearly a lot of risks to this approach and Sears and her counterparts are quick to point out that the biggest among them is that you’ll fail to sell any books at all and lose your employees along with your authors. Yet in practice, the opposite has happened. Booktrope has seen tremendous success with RiverSong by Tess Thompson that has sold over 100,000 copies along with bestsellers from A.J. Aalto and Marnie Mann.

But the success may not be accidental. Indeed, there’s a lot of it going around among the hybrid publishers. Entangled Publishing had 13 books on the USA Today Bestseller list last year and 8 of them hit The New York Times list. When I asked Liz Pelletier, Entangled’s publisher about the factors behind all of those bestsellers, one that she pointed to was the alignment of incentives:

When the book releases, we’re all motivated to make a bestseller. We’re all invested in each title. We’re also willing to go back and look at a title that’s not selling well. Sometimes the blurb isn’t working, the cover is not working, the edits are not working – or maybe the timing is not right. Right now paranormal is a very soft market but that doesn’t mean it won’t come back or we shouldn’t have paranormal titles.

The low cost structure and the entrepreneurial structure of hybrid publishers gives them another important advantage: agility. In fact, their most important tool may be their ability to mimic self-publishers in speed to market while bringing considerably greater resources to bear:

#3 Agile Marketing –

The book market operates like most other consumer goods markets. New segments emerge, expand and then sometimes implode. Big 5 publishers have long struggled to exploit growing market segments because their product development cycle operates in slow motion. Even when a manuscript is finished it often takes a year or longer to publish the book. Hybrid publishers, in contrast, turn out books dramatically quicker. Sears boasts that the window from editing to printing at Booktrope is no more than four to six weeks.

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Hybrid publishers are not a development of the last “two years.” Samhain has been in business considerably longer, I believe, and here at BelleBooks, I can tell you for a fact we’ve been in business since 2000, following the business model that you outline and building a list that now includes two major imprints (Bell Bridge and Imajinn Books) has a back and front list now at 400 titles, and supports a staff of both full-time and part-time employees. We moved from a print-oriented model to ebook in 2009, and though we continue to offer all titles in POD editions, our bread and butter is ebook by far. In 2013 we were one of the few publishers outside of the Big 5 to make Digital Book World’s list of Top Ebook Publishers. Check us out.

Thanks for you clarification. I did not mean to suggest that hybrid publishers did not exist until two years ago but rather that they’ve emerged as a distinct and important class that now present a real challenge to Big 5 publishers. I think this is particularly true because of the many titles that hit the USA Today bestseller list from hybrid publishers last year. You make a good point that whenever we see an overnight success, it’s years in the making!

Terrific article, David. Those are interesting business models. I’m thinking the next step is the private equity publisher. they don’t buy your book and print/distribute it, they invest in your book as a partner. Something like a hybrid services, agent, and publisher in one.

Seeley, In some ways, all publishers today are venture capitalists. They make a lot of bets on authors – some small and some big – and wait for a few to succeed. But many authors receive little pre-or post-publication marketing support. I like the hybrid model because it does a good job of aligning incentives. Since editors, marketing managers and designers don’t get paid unless a book makes money, there’s a huge disincentive pursue a strategy that has a few large winners and many losers… dv

Booktrope is amazing! I published my first book with them last November. I was just named a finalist in the MARSocial Author of the Year Competition after I entered my debut novel, Between Boyfriends. Another Booktrope author, Lilian Roberts, was also named a finalist. Booktrope has a great group of authors! http://www.sjpublicity.com/1/post/2014/01/lilian-roberts-and-sarka-jonae-both-make-it-to-the-final-round-of-the-author-of-the-year-competition.html

David, great article that should trigger even more thinking about this emerging area. Going back to one of your earlier pieces about how libraries could play a role in possibly uncovering the hidden gems in indie books, I am wondering if you might see the library community building stronger ties with the hybrid publishers? Hybrid publishers might be that first filter that the librarians are missing at this point, and the libraries could help with the marketing much like you pointed-out the libraries did in the 20th Century 1950s era with the traditional book publishing industry.

I haven’t researched the other presses, but She Writes press charges an up-front $50″submission” fee. And their publishing package is $4900…And they take 30% of your royalties. http://shewritespress.com/how-it-works/

Please correct the statement that a so-called “hybrid” publisher doesn’t charge fees. It’s a cutesy name for what it’s always been: VANITY publishing.

To anyone who’s considering using such a publisher for your work, remember: money should always flow TO the writer, not away from him or her.

Perhaps the face of publishing is changing, but there are still many great small presses who do not charge fees and who have a royalty split with the author. Some even still offer a small advance. If nothing else, Amazon doesn’t charge the fees and you still get your royalties, so please research and read all contracts carefully before you sign anything!